Sunday, October 7, 2012

News on hydropower projects in Zimbabwe (Kariba) and Ivory Coast (Soubre)

Cabinet restores Kariba's US$700m power tender
October 5, 2012
Zimbabwe Independent

Cabinet on Tuesday reversed a decision by the State Procurement Board
(SPB) to cancel the tender for Kariba South's US$700 million expansion
programme which had been awarded to Chinese firm Sino-Hydro.

Sino-Hydro was the sole bidder for the project, but had failed to win
the tender after disagreements with the SPB over a site visit
certificate and bid bond which is issued as part of a bidding process by
the surety to the project owner, to guarantee that the winning bidder
would honour the contract under the terms on which it bid.

Sources said the Chinese firm's bid was restored after stormy debates in
Cabinet on Tuesday.

Before cabinet overruled the SPB's decision to cancel the Sino-Hydro
tender, Energy and Power Development minister Elton Mangoma had
complained of the cancellation saying it was unfortunate that flimsy
reasons were being given as the basis for cancellation of such an
important national project.

Once fully operational, the Kariba South plant is expected to provide an
additional 300 megawatts to the national grid by 2016, and commission a
massive 800MW at the Batoka Gorge four years later if funding is secured.

Zimbabwe is only capable of generating about 1 200MW of the peak
national demand of about 2 2000MW, and government's decision to restore
the deal is part of its efforts to curb a crippling power shortage that
has stalked the country, particularly in the past five years.

The country's industrial capacity utilisation stands at an official 60%,
raising fears the power deficit would worsen should capacity utilisation

Zimbabwe Energy Regulatory Authority chairperson Canada Malunga last
month said the new energy policy acknowledged the role of renewable
energy sources and the power regulator was working on an Independent
Power Producers policy framework.

The regulator has licensed various large electricity generation
projects, investing in 11 new projects with a combined capacity of about
5,400MW valued at US$10 billion.

Zimbabwe's power shortage has resulted in numerous outages for domestic
and business consumers, affecting government projects aimed at helping
boost economic revival.

Zimbabwe plans to raise power output to 10,000 megawatts in line with
the National Energy Policy.


Zesa tender raises storm
Monday, 08 October 2012
Zimbabwe Herald
Herald Reporter

The State Procurement Board has reversed its decision to cancel the
tender for the expansion of Kariba South power station after the sole
bidder SinoHydro Corporation Limited protested against it.

The SPB had cancelled the tender following a recommendation by the
Zimbabwe Power Company that the firm had failed to meet the tender

SinoHydro, however, argued that it met all the tender requirements
adding the firm had long signed a Memorandum of Understanding with
Treasury for the project.

SinoHydro said in the first place the project was not supposed to be
open to tender because it signed the MoU with the Ministry of Finance in
2010 for the US$700 million project.

In a letter to SinoHydro last week, SPB principal officer Mr Cledwyn
Nyanhete said his board was reversing its decision to cancel the tender
without giving reasons.

"Your technical and funding proposals with respect to the above tender
(ZPC/KPS 0212: Kariba South Power Station Extension Project) is accepted
to proceed to the financial evaluation stage," said Mr Nyanhete.

On September 18, 2012, Mr Nyanhete had informed SinoHydro that its bid
had failed because the company failed to provide bid validity, spare
parts list and site visit certificate.

"Tender No. ZPC/KPS 02/2012 for Kariba South Power Station Extension
Project, be and is hereby cancelled due to the failure by the sole
bidder to meet tender requirements.

"SinoHydro Limited should collect their financial proposal envelope
unopened," said Mr Nyanhete.

However, SinoHydro Ltd on September 27 contended that the reasons for
the cancellation of the tender were weak. The company's representative,
Mr Wu Yifeng, said his company already had a deal with the Government
for the project.

"We would like to remind the State Procurement Board that SinoHydro
signed an MoU with the Ministry of Finance in 2010, which is still
officially in force and effective. However, this was subsequently
ignored by the Government of Zimbabwe when an international tender was
floated to which SinoHydro responded after deciding not to raise the
issue of the legality of calling a tender for a project already covered
by an MoU," Mr Wu said.

He said in their bid letter they stated that their tender would remain
valid for acceptance by the SPB at any time within the period of 180
days from the date fixed by the SPB. "SinoHydro completed their offer in
accordance with the RFP and in envelope three (financial offer) we
clearly state the bid validity is 180 days as required. In addition, our
bid bond is valid until December the 3rd, 2012 and thereafter for a
further 35 days for action by ZPC.

"Therefore we would question why the absence of a specific date has been
raised as a justification for disqualification," said Mr Wu.

On spare parts, they stated that in consideration of the limited shelf
period of some spare parts proposed for the project, the spare parts
would be provided in batches and lots according to the wearing
conditions of the plants and equipment to ensure the regular operation.

Mr Wu said in their offer, they clearly provided for a comprehensive
spare parts list to be provided at detailed design stages. "The
provision of a spare parts list in advance of the final design being
agreed by ZPC is counter to normal tender specifications and we believe,
would be prejudicial to the best interests of ZPC," he said. He said
SinoHydro also attended three obligatory site visits stipulated by ZPC.

Changes on the deadline of the tender, Mr Wu said, could have resulted
in his organisation enclosing the wrong certificate.

He said their attendance was verifiable with the ZPC and its advisors.
"For us now to be disqualified on the basis of the above reasons, none
of which have a material effect on the tender offer would be grossly unfair.

"Please be assured that we fully respect the tender regulations as laid
down by the Government and governed by the State Procurement Board, but
we strongly believe that there are mitigatory grounds for reconsidering
the decision of PBR1670," said Mr Wu. It is understood that when the MoU
was signed, SinoHydro Ltd would secure funding for the project from
Export-Import Bank of China.

Sources close to the developments said during adjudication, SinoHydro
took a delegation of officials from Treasury, ZPC and ZPC technical and
funding consultancy to Exim Bank.

"When the SPB opened the funding and the technical proposals, they said
it was valid and submitted it to the ZPC for evaluation.

"In early September, ZPC wrote a letter to the SPB saying they were
happy with the funding and technical proposals by SinoHydro but now all
of a sudden they have changed saying it failed to meet the tender

"It is clear that there is a hidden hand behind this because people at
ZPC do not want to own up to the recommendation they made that the
tender was supposed to be cancelled," said a source. SPB chairman, Mr
Charles Kuwaza, a fortnight ago said his board was yet to consider the
complaints raised by SinoHydro Ltd.

It is, however, understood that the SPB is not allowed by the
Procurement Act to overturn its decisions. It is only the courts that
can adjudicate over appeals.

No comment could be obtained from ZPC managing director Mr Noah Gwariro.


Ivory Coast eyes $556 mln from China's Exim for new power station
Fri, Oct 5 2012
By Loucoumane Coulibaly

ABIDJAN, Oct 5 (Reuters) - Construction will begin on a 275-megawatt
hydro power station in Ivory Coast by year-end supported by a $556
million low-interest loan from China's Export-Import Bank, a top energy
ministry official said.

Ivory Coast's government is pushing plans to increase the country's
production capacity by 150 MW per year over the next decade, part of
efforts to renew long-neglected infrastructure following years of
political turmoil.

"We'll have Chinese financing for 85 percent of the 330 billion CFA
francs ($654.26 million) through Exim Bank, and the Ivorian share will
be the remaining 15 percent," Sabati Cisse, energy director for the
ministry of mines and energy, told Reuters in an interview.

The two parties have agreed to a 2 percent interest rate and a nine-year
grace period for the 20-year loan, Cisse said.

"Everything is in place. The financing has been acquired. The last
signatures, those for the loan agreement, will be done in the first half
of November at the latest," he said.

Authorities first announced plans to build the Soubre hydro-electric
station late last year. Work on the project is expected to last 5 years.

Unlike many countries in sub-Saharan Africa, Ivory Coast has reliable
power supply and exports electricity to Ghana, Burkina Faso, Benin, Togo
and Mali.

It has plans to add Liberia, Guinea and Sierra Leone to its grid.

The country's six hydroelectric stations and three thermal stations have
a total production capacity of 1,390 MW.

But weather has made hydro-electric output unreliable and consumption is
rising, up 3.5 percent to reach 4,010 gigawatt hours in 2010.

Investment in the sector was hobbled during a 10-year political crisis
that divided the world's top cocoa grower into a rebel-held north and
government-controlled south. A brief war ended the impasse and reunited
the country last year.

The government has promised to spend $500 million to renew the sector
and is seeking additional financing.

Plans include construction of a 330--megawatt thermal power station near
the commercial capital, Abidjan.

($1 = 504.3880 CFA francs) (Writing by Joe Bavier; Editing by David
Lewis and Jason Neely)

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